The Rise of Contactless Deliveries in Public Spaces: How Modern Petrol Stations Are Adapting

The petrol forecourt industry is brutally competitive, often operating on slim profit margins and facing harsh rivalries. With more electric vehicles coming onto the market, petrol stations will increasingly need to create additional income sources to ensure their survival in the next stage of automotive travel.

Current Challenges for Petrol Forecourts

Echoing Bob Dylan’s timeless lyrics, “the times they are a-changing;” this statement is particularly fitting for today’s petrol forecourts as they face multiple challenges, including the following:

The Shift to Electric Vehicles

As the drive to reduce our dependency on petroleum intensifies and the move toward electric cars gathers momentum, modern forecourts must consider revamping their strategies and offerings. The sale of electric vehicles hit a record-breaking 1.2 million vehicles sold last year, with the share of EVs in the auto market reaching 7.6%.¹ Demand, therefore, is surging for petrol station operators to include reliable EV charging stations.

As global credit ratings agency Morningstar DBRS said in a recent report, “…operators would need to evolve and address challenges around intensifying competition, their changing business and operating model as well as infrastructure concerns, to maintain market share, profitability, and relatively stable credit risk profiles.”²

Unpredictable Fuel Demand

Estimating demand between now and 2050 varies widely from +1% to -38%.³ These huge ranges make it difficult for gas station operators to plan appropriately.

How Modern Petrol Stations Are Adapting

Savvy modern gas station operators are adapting to serve customers better in a number of strategic and innovative ways:

Adding Electric Payment Options

Contactless Payments: Many petrol stations in the UK now accept contactless payments, which allow customers to pay for their fuel using tap-to-pay functionality with their debit or credit card, or mobile payment services such as Apple Pay or Google Pay.

Proprietary Apps: Leading petrol stations in the UK, such as BP, Shell, and Esso, have their own mobile apps that allow customers to pay for fuel and other products without leaving their car. These apps enable customers to authorise pump purchases, track fuel rewards, and even locate nearby stations.

Payment Providers: UK payment providers such as PayPoint and Zapper offer mobile payment solutions for petrol stations and convenience stores, allowing customers to pay for fuel and other products using their mobile devices.

Loyalty Programs: Many petrol stations in the UK offer loyalty programs that reward customers for their purchases. For example, BP’s Driver Rewards program allows customers to earn points for their fuel purchases, which can be redeemed for discounts on fuel and other products.

Data-Fuelled Promotions

As hinted above, loyalty programs are the secret sauce to offering tailored specials, discounts, and even BOGOs (“Buy One, Get One” promotions). With a treasure trove of data and the app on customers’ smartphones, the opportunities for petrol station owners to create promotions, send out alerts, and communicate with customers are endless.

Service Diversification

Leveraging new products and services allows a petrol station owner to tap into new revenue sources. These offerings help offset lost sales from the changing petrol station, service station, and filling station landscape, whether adding biofuel or diesel.

The average customer spends only 2-3 minutes fuelling their vehicle and around four minutes inside the convenience store. As a result, the objective of every forecourt operator is simple: entice customers to step inside the store to spur incremental purchases. A recent study shows that while products inside the store only ring up 30% of the average petrol station revenue, they account for 70% of the profit.⁴ Health and beauty products plus candy typically return over 50% profit margins.

UK petrol stations often have convenience stores or food outlets attached to them, offering a range of products to entice customers to step inside. Some provide household goods, and many offer food such as snacks, pastries and breakfast sandwiches, as well as gourmet coffee and other beverages. Gourmet coffee and beverages are also profit margin leaders and are of keen interest to petrol station customers. Gen Z, in particular, is fascinated with fresh drinks. 62% of them reported trying a new beverage in the past month.⁵

Partnering with banks to provide ATMs, laundry services, and other service add-ons makes modern petrol stations more appealing and profitable.

Ignite New Revenue Streams: Become an Open Locker Network Host

The rise of e-commerce is paving the way for new opportunities. Petrol stations, strategically positioned and often operating with extended hours, can add a service that increases revenue and benefits local, commuting customers: offering parcel pickup and returns at their locations.

With forecourt operators striving to further prioritise the customer experience, promote sustainability, encourage community involvement, and boost profitability, offering open network parcel lockers at gas station locations is a potential game-changer.

Improves the Customer Experience

Smart lockers offer a quick and easy solution for picking up and returning parcels, seamlessly doing away with the annoyances of lost or stolen packages and time-consuming waits at conventional locations (i.e., the post office or carrier storefronts).

Promotes Sustainability

Parcel lockers are a significant ally in addressing the pressing concern of sustainability in today’s world, helping to reduce the carbon footprint that comes with last-mile deliveries. The positioning of smart lockers in local forecourt locations enables consumers to consolidate tasks and collect their parcels while filling up their petrol tanks, grabbing a bite from the store, or getting their car washed. One recent market research study confirms that consumers would substitute 47 deliveries a year with trip chaining, saving an estimated 1.4 billion miles driven by carriers when given a choice.

Boost Community Involvement

No longer is a filling station or service station simply a place to refuel your vehicle; they’re evolving into vital community hubs. Open network parcel lockers enhance community links, functioning as communal collection centres for the neighbouring area.

Drive Foot Traffic and Revenue

Every electronic locker interaction is an opportunity for additional sales. Recent consumer surveys have shown that most individuals would pick up or return a package at a smart parcel locker and visit a business more regularly if a parcel locker was available. Further, carrier-agnostic lockers act as a competitive differentiator and mechanism for driving loyalty.

Since Parcel Pending by Quadient takes care of installation and maintenance, the lockers come free of cost to forecourt owners and can consistently drive revenue. Petrol station operators only need to provide space to install the lockers; this can be either indoors or outdoors depending on preference and available space at your forecourt location.

With revenue pressure from the rise in electric vehicles, slim margins, and competitive activity, gas stations need additional revenue sources. Becoming an Open Locker Network host provides a competitive advantage while boosting foot traffic, community, sustainability, and revenue.

Ready to learn more about becoming an Open Locker Network host? Contact one of our parcel management experts today.

Sources:

1. Cox Automotive. A Record 1.2 Million EVs Were Sold in the U.S. in 2023, According to Estimates from Kelley Blue Book. www.coxautoinc.com. January 9, 2024. https://www.coxautoinc.com/market-insights/q4-2023-ev-sales/
2. Malik, Adam. How EVs are impacting gas stations. www.autoserviceworld.com. September 21, 2023. https://www.autoserviceworld.com/how-evs-are-impacting-gas-stations/
3. Beard, Frank & Lawrence, Brandon. The Road Ahead: Why retailers need to focus on fuel in 2024. www.cstoredive.com. December 20, 2023. https://www.cstoredive.com/news/the-road-ahead-retailers-need-focus-fuel/702999/
4. Crockett, Zachary. Why most gas stations don’t make money from selling gas. thehustle.co. April 15, 2022. https://thehustle.co/why-most-gas-stations-dont-make-money-from-selling-gas/
5. Haddon, Heather. The Fast-Food Industry Wants to Be the Fast-Drinks Industry, Too. www.wsj.com. December 20, 2023. https://www.wsj.com/business/hospitality/the-fast-food-industry-wants-to-be-the-fast-drinks-industry-too-1fa6bf4a